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Individual Tax

IRS Creates Child Tax Credit Non-Filer Sign-Up Tool

Thomson Reuters Tax & Accounting  

Thomson Reuters Tax & Accounting  

In a Treasury Department press release, an IRS news release, and IRS webpages, IRS has announced its creation of the Non-filer Sign-up Tool, to be used by non-filers to provide information so that IRS can send them advance payments of the 2021 child tax credit (CTC).

Background—child tax credit.

Taxpayers are allowed a CTC—temporarily expanded and made refundable for 2021 by the American Rescue Plan Act (ARP Plan or ARPA, PL 117-2, 3/11/2021)—for each qualifying child. (Code Sec. 24)

For 2021, a qualifying child with respect to a taxpayer is defined as an under-age-18 child, whom the taxpayer may claim as a dependent (i.e., a child related to the taxpayer who, generally, lived with the taxpayer for at least six months during the year), and who is a U.S. citizen or national, or a U.S. resident. (Code Sec. 24(a); Code Sec. 24(c); Code Sec. 24(i)(2)(A))

Background—advance payments of CTC.

IRS is required to establish a program to make periodic advance payments which in total equal 50% of IRS’s estimate of the eligible taxpayer’s 2021 CTCs, during the period July 2021 through December 2021. (Code Sec. 7527A)

In IR 2021-113, IRS provided information about the advance payments including that they will begin on July 15, 2021. Thereafter, they will be made on the 15th of each month unless the 15th falls on a weekend or holiday. See Advance child tax credit payments to begin on July 15.

In IR 2021-124, IRS announced that, throughout the summer, it will be adding additional tools and online resources to help with the advance CTC. See IRS provides updated information on advance Child Tax Credit payments.

Background—Non-filers tool.

To facilitate the payment of Economic Impact Payments (EIPs) created by 2020 COVID-19 relief legislation, IRS created an on-line tool that “non-filers” could use to register for their EIPs (“Non-filers tool”). (IR 2020-69, 4/10/2020) See IRS launches new on-line tool to help non-filers register for Economic Impact Payments (04/13/2020).

IRS creates Non-filer Sign-up Tool.

The new Non-filer Sign-up Tool is for people who did not file an income tax return for 2019 or 2020 and did not use the IRS Non-filers tool last year to register for EIPs. The new tool enables them to quickly provide required information about themselves and their qualifying children age 17 and under. Users of the tool can also choose to enter direct deposit bank information so IRS can deposit the payments directly into their checking or savings account.

When taxpayers enter information about their dependents, they’ll need to indicate which of their dependents are qualifying children for the 2021 Child Tax Credit by using the check box provided on the form.

This tool is an update of last year’s IRS Non-filers tool. IRS worked with Intuit and the Free File Alliance to launch this new online tool.

Tool can also be used to obtain EIPs and Recovery Rebate Credits.

The tool is also designed to help eligible individuals who don’t normally file income tax returns register for the $1,400 third round of Economic Impact Payments (also known as stimulus checks) and claim the Recovery Rebate Credit for any amount of the first two rounds of Economic Impact Payments they may have missed.

Who should not use the new tool.

Do not use this online form if you’re required to file a tax return. Use of this online form creates a simplified 2020 tax return. If you’re required to file a tax return but file a simplified return instead, you won’t be able to e-file your 2020 Form 1040 or 1040-SR tax return. This will delay IRS processing your return and issuing any tax refund.

Also, do not use the form, unless you are doing so only to obtain a Recovery Rebate Credit, if:

  • You have already filed a 2020 federal income tax return.
  • Your 2020 gross income exceeded $12,400 ($24,800 for a married couple).
  • You were married at the end of 2020 but will not include your spouse’s information when using this tool.
  • Your main home is not in the United States.
  • You’re requesting advance Child Tax Credit, and you do not have a qualifying child who was born before 2021 and who had a Social Security number issued by May 17, 2021.

IRS warns about scams.

The IRS urges everyone to be on the lookout for scams related to both Advance Child Tax Credit payments and EIPs. The IRS emphasized that the only way to get either of these benefits is by either filing a tax return with IRS or registering online through the Non-filer Sign-up tool, exclusively on IRS.gov. Any other option is a scam.

To continue your research on advance payments of the 2021 CTC, see FTC 2d/FIN ¶A-4062.

 

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